Last year the U.S. Congress, concerned over the rising cost of long-term health care, adopted legislation intended to restrict the availability of information about Medicaid coverage for such care. The new enactment, frequently referred to as the “Granny’s Lawyer Goes to Jail” law, declared that any person who counsels or assists another person to make transfers of assets in order to qualify for Medicaid may have committed a crime. The person actually making the transfers will not have committed any wrongful act, and will not qualify immediately for Medicaid; nonetheless, the professional adviser who describes the completely legal choices may be severely sanctioned.

Last week, the New York State Bar Association announced that it has filed suit in an attempt to invalidate the new law. The lawsuit, filed in Albany, New York, asks the federal district court to declare that the law is unconstitutional because:

it violates the First Amendment protection of free speech, since it prevents attorneys from advising clients about legal alternatives and the effect of those actions, and

it is too vague to adequately warn lawyers and others about what activities might be prosecutable.

In a news release describing the filing, New York State Bar President Joshua Pruzansky observes that “lawyers are ethically committed to providing advice when questioned by our clients.” The Granny’s Lawyer Goes to Jail law sets a dangerous precedent, notes Pruzansky: “Does Congress next make advice to those faced with an ordinary tax audit criminal?”

The New York lawsuit will be prosecuted by one of the state’s largest law firms, the prestigious Nixon Hargrave Devans & Boyle, LLP. The firm is donating its services for the litigation. Other state, local and national bar associations have considered filing similar actions, and some may now join the New York lawsuit.

Although the new law had a chilling effect on many lawyers, there have been no prosecutions filed since its enactment. Many practitioners have continued to provide advice to clients, relying on the popular belief (reinforced by a Congressional Research Service review) that the law is unconstitutional and unenforceable.